[GRTV] Depressing imbalances in IP market: Hutchinson

Good Returns: Joining me now is Russell Hutchinson. He's the director of Chatswood Consulting, does a lot of research around the life insurance field and knows the market very, very well. Welcome, Russell. Nice to have you in here.

Russell Hutchinson: It's good to be here.

I thought we'd start off with income protection. There's a hell of a lot of changes going on here, and you're currently running a survey of advisors at the moment. So tell us a little bit about what you've found about the market and the product.

We're surveying what advisors are finding out about income protection underwriting right now. And we're doing that because quite a lot of companies have responded to both, if you like, the COVID crisis around income protection in some different ways, and that's showing up more in terms of what offers you're getting through underwriting than necessarily perhaps in all of the public statements that an insurer might make.

Well, because there's been a lot of change in term of how life companies are dealing with applications. So do you think we're going to get a new way of underwriting income protection going forward, and some of the changes people have made been good changes?

I think it's really about the product design. And a moment ago, just we were talking about what the problems are in Australia and the view that APRA has taken about the product. And so really, it seems to me, something quite fundamental about how income protection actually operates as a product, as opposed to underwriting. It's just what's going on in terms of income protection underwriting right now is a stop gap measure, really. And it's before the industry either settles back to normal or a new normal, as we keep talking about. And of course, what's going on in Australia is that APRA's come out and basically said that many of the core things that we know and see about income protection are not sustainable.

So do we have that issue in New Zealand? And do we have an issue around sustainability of the product?